U.S. Group Supplying Materiel to Contras in Violation of Pledge Made to Win Charity Status

WASHINGTON — A group providing river boats, a medical helicopter and other supplies to U.S.-backed rebels in Nicaragua obtained classification as a tax-exempt charity by promising the Internal Revenue Service that it would never furnish "materiel or funds" to insurgent groups.

The Phoenix-based U.S. Council for World Freedom acknowledged that it had obtained charity status three years ago--meaning that private and corporate donations are tax deductible--by declaring in writing that it would never "even contemplate" actions such as supplying the rebels.

But this year, the group is claiming credit for providing $100,000 to $300,000 worth of supplies and equipment to the anti-Sandinista forces, known as contras, with the blessing of the Reagan Administration.

And officers of the group repeatedly have said that the council's purpose is to provide materiel support for anti-Communist forces worldwide.

No Intent to Mislead

Top officers of the council insisted in interviews Thursday that they never intended to mislead tax officials. Instead, they said, they meant only to assure the IRS that they were not in the business of supplying arms, cash or military supplies to foreign revolutionaries, which could be a violation of U.S. neutrality laws.

Council Treasurer Johnny Johnson said in a telephone interview from his Phoenix office that he did not expect the IRS to question the council about its tax-exempt status because the group is carrying out President Reagan's policies.

"The President himself has said we have to help these refugees," Johnson said. "So, it's within the guidelines of the President, so I guess it makes it OK with the IRS."

IRS Declines Comment

A spokesman for the IRS, Wilson Fadely, said he would not comment on any specific case or on whether the charitable status of any organization is being investigated. But if a dispute arises, he said, it could rest on unanswered questions of just what a charity is and whether helicopters and river boats "fit the legal definition of a charitable contribution."

The IRS said that its Los Angeles office classified the U.S. Council for World Freedom as a charity in October, 1982, after what council officials recalled were several IRS inquiries about the nature of the council's activities.

In response to one question, a former council treasurer wrote the IRS: "At no time will the USCWF ever contemplate providing materiel or funds to any revolutionary, counterrevolutionary or liberation movement." The words "at no time" were underlined in the document, a copy of which was obtained by the Associated Press by invoking rules under the Freedom of Information Act.

Recalling the Pledge

A former council treasurer, Albert T. Koen of Tempe, Ariz., recalled Thursday that when he and an attorney for the group made the pledge, the council was not directly involved in providing assistance to Latin American rebels.

He added: "The tone of the (IRS) query was, 'Are you figuring on arming these people?' And that was what we were answering: 'No, we're not going to give them arms, and no, we're not going to give them money, because they'll buy arms.' "

But in retrospect, Koen said, "I probably wouldn't have used the word materiel."

Retired U.S. Army Maj. Gen. John K. Singlaub, who founded the U.S. Council for World Freedom, said the organization "already submitted to the IRS an explanation. We're trying to clarify it. We're no different than other groups."

Group Privately Funded

The council, which says it is privately financed to "promote the cause of individual and national freedom," is the U.S. arm of Singlaub's World Anti-Communist League.

Singlaub was relieved of his command of U.S. forces in South Korea in 1976 after publicly criticizing then-President Jimmy Carter's plans to withdraw troops from that nation. He later criticized Carter for postponing production of the neutron bomb, then retired from active duty.

The former officer said the helicopter and river boats for the contras fighting Nicaragua's Sandinista regime should not be labeled military supplies, even though they are being used to transport battlefield casualties to hospitals. He characterized the items as "humanitarian aid."